Everyone wins 54 and loses 54. It's what you do with the middle 54 that counts.

Jorge Soler’s Open Market Value Is Mostly Opportunity Cost

Bids should now be in to the representatives for Cuban free agent Jorge Soler. Buster Olney at ESPN reports the Cubs, Dodgers, Yankees, and Braves as being the four most interested parties. Rumor has it, the final price for Soler will come somewhere in the $25-35 million range.

In the strictest sense of answering the question “Is Jorge Soler worth 25 million dollars?” we need to wait and see. Soler is only 20 years old and unlike recent Cuban defector Yoenis Cespedes, Soler will require some time, perhaps as much as a few years, in the minor leagues before he is ready for the level of competition he will face at the Major League level. In a decade or so, we can sit back and have the discussion of whether or not the eventual winning bidder was in fact a “winner” in the bidding, or if they bought a lemon.

In another sense, though, we can answer a few theoretical questions about the value of a top-flight prospect. To be clear, Soler is that top-flight young player. Were he inserted into a numerical ranking of top prospects today, he’d likely land somewhere in the 30s, possibly higher and almost certainly not lower. Soler is a prototypical right-fielder with a muscular, athletic 6’3″ 200-pound frame, and a bat that scouts say is lightning fast and possessing of plus-plus power. Baseball America has said that if Soler had been in the 2011 draft (one of the most talent-rich drafts in history if not the most so), Soler might have gone as high as number five overall.

We know the value of a top-5 pick in the 2011 draft, and it’s a healthy chunk of money. Of the top 6 picks, only number-three pick Trevor Bauer signed a bonus less than $6.25 million. Bubba Starling–compared by many to Soler–went number five and signed for $7.5 million. Both are outfielders with big raw toolsheds full of skills, and only 3.5 months (Starling is younger) separates them in age. The value of signing Soler, then, were he draft-eligible, would have been in 2011 somewhere in the $6.25-$7.5 million range. That’s the bonus a team would have to have paid to have signed him in the top seven last year. This year, the average slot value for picks 1-5 was just over $5 million. So I’ll draw a baseline of $5 million, and assume that’s about the cost that, were there a draft today, and were Jorge Soler in that draft, a team would have to pay Soler via draft bonus to retain his services.

The most important part of the equation is scarcity. Soler is the last of something. Let’s say you’re a Mariners obsessive, and an equally obsessive collector of bobbleheads. You look on eBay and find there are 30 sellers offering the Larry Bernandez bobblehead, which you want (and even if you’re not a Mariners or a bobblehead obsessive, you should want one of these). Those 30 sellers offer a variety of prices and you’re able to nab one for $25. It’s pricy because it’s awesome, even though they’re bountiful enough in supply. But what if suddenly eBay were going to close? And you don’t live in Seattle and have access to Felix Hernandez alter ego based bobbleheads? And you have only a short window of time to pay whatever it takes to make sure you’re the person who buys the last available Larry Bernandez bobblehead on the soon-to-vanish eBay? Now what do you pay? Twice the price, at $50? Four times, at $100?

Baseball’s new CBA has (ridiculous) new rules (foolishly) suppressing the amount of money (that belongs to MLB owners and should be spent however and in whatever volume they want to spend it) that can be spent on international free agents. These rules will kick in on July 2. Soler can be signed up to then for any amount of money a team wants to give him, as permitted (or, more accurately, not forbidden) under the former CBA.

With the window closing, Soler is the metaphorical last Larry Bernandez bobblehead. We know he’s worth at least the $5 million it would cost to sign a similar talent if taken in the draft, but the wild card in the equation is that Soler isn’t in the draft. A team need not have been bad enough last year to have a shot at him. Just an open wallet. The question isn’t, today, what is Jorge Soler worth? It is: What is a surplus chance at a top-5 talent worth? Even a poor team drafting Soler #5 overall would shell out the five million in bonus, but what do you pay for that chance you can’t, after this limited-time offer expires, have?

A team buying Soler’s services on the open market is buying opportunity. The teams listed as most motivated in the bidding–the Cubs, Braves, Yankees and Dodgers–are all teams with deep pockets, and with the exception of the Cubs, all teams who have not recently–and should not be in the near future–been drafting in the top of the draft. They’re buying an opportunity they don’t typically get.

While all the great players who were taken in the draft are not all top-of-the-draft picks, and while not all the top-of-the-draft picks are great players, history (and looking stuff up on the internet) tells us a clear story: the higher a player is taken in the draft, the more likely he is to A) become a Major League player, and B) become an impact player in Major League Baseball. Early talent can be predictive of future success. A team like the Yankees, reportedly in on the bidding for Soler, know this. They signed Robinson Cano out of the Dominican when he was a teenager. Jesus Montero out of Venezuela when he was 16. Mariano Rivera out of Panama. Bernie Williams was 16 when they signed him out of Puerto Rico. These are examples of a team that virtually never got a top-of-the-draft pick acquiring top-of-the-draft talents via aggressively scouting and signing Latin American talent. Each of those players (we’ll consider Montero’s results as a Mariner as the reward on New York’s speculative signing) were worth the money they club spent for them and then some. Certainly a lot of Latin bonus-babies busted beautifully, but buying the opportunity is the only way to reap the reward.

Some teams don’t have the money to sign Jorge Soler for $25-35 million. We don’t hear their names mentioned. The teams we do hear mentioned have the money and consider it to be a reasonable cost to pay to have not Jorge Soler per se, but the opportunity to have Jorge Soler plus Jorge Soler. The big cost outlay doesn’t just buy Soler, it puts them in the running for Soler in the first place.

Is Soler worth $20-30 million in opportunity cost? Heck, I don’t know. Again, time will tell. But if I were an MLB owner who could financially afford buying that opportunity cost, I’d jump. What the amount he receives will tell us, once it’s announced, is what the top bidder was willing to pay, beyond $5 million, for opportunity. Which, oddly, might tell us the perceived value among MLB executives between the #28 pick in a draft, and the #5 pick. That could be $20-30 million, which is an interesting concept.